Small Business owners speak up: “We suck at invoicing!”

One of the biggest small business invoice challenges out there, is getting them paid on time!

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Managing cash flow in your business can be one of the trickiest parts of running your business. Recent data compiled by the research firm CB Insights found that 29% of startups fail because of a cash crisis. It was the second highest cause. (The number one factor, at 42%? A lack of a need for their product in the marketplace.)

Some small business owners seems to forget that their cashflow starts with the actual invoice they send to their customers – or not. Having consulted with a specific client for a number of years, it always blew my mind when we analysed their management accounts and their revenue was way below their budgeted figures and cashflow as a result extremely volatile.

Turns out after digging a bit deeper into the root cause of this, was that the partners of this firm felt that they couldn’t invoice the full work-in-progress (even though the customers signed off on it) at each stage of completion of the project. So instead of invoicing a smaller amount each month, they refrained from invoicing altogether! Now for most of us this seems insane, but this was a real problem for them that took us quite a while to sort out and for them to realize that everyone is entitled to fair compensation for their efforts.

This is just one of many challenges small business owners face and we found it quite interesting when we investigated the below mentioned summary of challenges small business owners suffered globally:

Small Business invoice challenges

Getting invoices out on time when you’re busy

This is a common problem. When your business is thriving and you’re busy working to make money, taking the time out to send invoices can be difficult. Consider using cloud accounting software to quickly prepare and send invoices.

Following up on overdue invoices

This is related to the previous point – time is always at a premium in a busy small business. Again, cloud accounting software can help by automating reminders based on your settings.

Splitting payments across multiple invoices

Account reconciliation can be tricky at times. Make sure your clients include your invoice numbers as references for every payment they make, to help you work out which invoices have been paid.

Invoicing quickly and accurately

It’s important that your team communicates effectively with your Finance Manager or accountant, to ensure that work carried out is invoiced properly every time.

Ensuring that all completed work is invoiced

Time-tracking software can be useful here, especially when there are several people working on each client account. Be sure to get this right, otherwise your business will be throwing away money by working for nothing.

Creating an invoice that doesn’t go to the bottom of the pile

You can design your invoices so that they stand out, but what’s more helpful is to build up a good working relationship with your client’s accounts department. Don’t rely on a pretty invoice to get you paid.

 

 

 

 

 

 

 

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